Financial Terminology for Drawing and Disbursing Officers

Financial Terminology for Drawing and
Disbursing Officers

Debenture

The word is derived from the Latin debeo I ower.  It is an acknowledgement of indebtness usually given by an incorporated company.  It bears a specified or fixed rate of interest which is payable whether or not the company makes profits.  Debentures are usually redeemable by the issuer.

Debit

The left hand side of a T-account.  A charge against a person or account.

Debt Capital

Money loaned to a firm for a considerable period of time (at least twelve months). Providers of debt capital are creditors of the firm and receive an interest in contrast to shareholders who have ownership rights, including the right to a division of profits.

Debtor

A person or an enterprise that owes a debt.  In most business, the debtors arise out of credit sales made.  They are current assets of a firm and form an integral part of the working capital of a business.

Deed

A legal document which has been signed, sealed and delivered.  A written document under seal which is an evidence of a legal transaction.

Deficit

A shortfall of revenue as compared to expenditure.

Deficit Financing

Deliberate budgeting for a deficit.

Depreciation

The financial provision for the diminution in asset value out of profits of a firm.  The loss of value of an asset due to time, normal use, or obsolescence.  A fall in the purchasing power of money i.e. its exchange value in relation to goods and services.  The allocation of the original cost of plant, property and equipment to the particular periods or products that benefit from the utilization of assets.

Direct Costs

Costs which can be reasonable attributed exclusively to the production of particular goods or services, e.g. cost incurred by a department for the sole benefit of the department.

Direct Labour

The labour of those people who work directly on materials converted into finished products; in other words, with units of product designated as the cost object; labour that can be easily associated with units of product.

Direct Material

All raw materials which are an integral part of the finished goods and which can be conveniently assigned to specific physical units.

Direct profit

Sales revenue from a product less the direct costs attributable to that product.

Dirty money

An extra payment made to workers for handling goods of an objectionable nature.

Disclaimer

A statement clause in a deed, contract etc. renouncing, claims, responsibility, duties or powers.  The term is applied to matters where a renunciation or repudiation is desired.

Disclosure

The practice of revealing information especially financial about a firm or company’s activities.  A certain amount of necessary disclosure of data or information about a company is required under the companies Act. 1956.

Discount

A deduction from the catalogue price of an article, in cash or kind.  An incentive or inducement offered by a creditor to debtors to pay promptly.  To acquire a bill of exchange less than its face value, the amount of this discount depending on the length of the unexpired term.  When shares and stocks are issued below the issue price, they are said to be issued at a discount.

Dishonour

When applied to a bill of exchange or cheque, it implies a failure to meet the financial commitment as promised or accepted.

Distribution Costs

Costs related with transferring goods from a supplier to the customer.  They include packing and transportation costs.

Diversification

Expansion of the range of products and services produced by a firm into other related or unrelated industries or markets,.

Dividend

The amount of distributed profit as a percentage of the nominal value of the share capital to which it relates.  A periodical division and distirubtion of profits amongst share-holders. Dividends are usually declared annually, but many companies pay something on account of interim dividend

Double Entry Accounting

An accounting system in which each transaction is recorded and effects two or more accounts with equal debits and credits.

Duality

The concept of double entry.  That every transaction has a dual value aspect i.e. a flow of value from source to a destination.

Duties

Taxes on merchandise or goods entering a country known as customs.  A payment which is evidenced by affixing a stamp known as stamp duty. All imports levied by a Government.

Earned Income

Income derived from work as distinct from income from investments.   Income from salaries, wages, profits, pensions, social-security benefits, annuities etc. which is taxable for income tax purposes.

Embezzle

Dishonestly using someone else’s money; the person whose money is taken may be an employer. Exbezzlement is the appropriation to his own use by an employee of money rightfully belonging to his employer.

Emoluments

The remuneration or salary and other material benefits received for holding a certain position in a firm, company or organization.

Endorsement

A signature, generally on the reverse side of the document given to transfer the rights to which the document given to transfer the rights to which the document gives rise to some other party or person.  Endorsement may or may not be compulsory.

Equity

A right, claim or interest in property.  The net worth of a business, consisting of capital stock, capital  (or paid-in) surplus, earned surplus, (or retained earnings), and sometimes, certain net worth reserves.  Common equity is the part of the total net worth belonging to the common stock holders.  Total equity would include preferred stock holders.  The terms net worth and common equity are often used together.  Ordinary shares or stock. The risk capital of a business.

Equity share capital

The company’s issued share capital excluding any part which carries any right to participate beyond a specified amount in a distribution.

Expenditure

A cash disbursement.  Expenditure of revenue nature is one which is incurred for current or short-term activities and is debited to the profit and loss account.  Capital expenditure is usually heavy in nature and incurred on purchasing assets which are likely to give long term benefits.

Expenses

Expired costs that are deducted from revenue for a given period. These are recurring charges and payments made in cash.
*Copyright © 2018 Dr. Lalit Kumar. All rights reserved. 

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